Flashcards in 18- FM Environment Deck (8)
what is a reverse yield gap?
reverse yield gap is where the yield on debt is greater than that of equity
What are the common roles of the treasury function within a firm?
Short term management of resources
Long term maximisation of shareholder wealth
What are examples of market failure where regulation may be a solution?
Social costs or externalities
how can imperfect competition be addressed
Imperfect competition can be addressed by a competition regulator to prevent consumers being taken advantage of, for instance by a firm with monopoly power
how can social costs be addressed
Social costs or externalities can be regulated against by imposing fines on firms that create them, for instance where a factory emits too many greenhouse gas
how can imperfect information be addressed
imperfect information can be legally addressed by ensuring full disclosure, for instance on the launch of a bid for stock market flotation, so as not to disadvantage purchasers of shares
What should the audit committee consist of
Non executive directors